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Tuesday, 11 June 13
COAL: NO SIGN OF RECOVERY - GABRIELLA
 COALspot.com: We attended the 19th Annual Coaltrans Asia Conference, where we found most of the speakers were not very optimistic on the outlook for coal mining in the months ahead. The main concern is abundant supply outreaching demand growth.
We maintain an UNDERWEIGHT recommendation on the sector.
However, for investors still seeking some exposure to the coal mining sector, PTBA is a solid defensive play given:
1) its low cost structure and defensive earnings,
2) its abundant reserves supporting strong production growth and
3) its strong balance sheet. Going forward, we foresee further declines in EPS due to continued depressed coal prices which will result in lower Target Prices from current levels. Below are some key takeaways:
Coal Mining Conditions in Indonesia as the biggest exporter
As of May 2013, Indonesia’s coal resources amounted to 159bn tons with coal reserves of 32bn tons – about 3% of the world’s coal reserves. Presently, there are 76 Coal Agreements (PKP2B) and 3,892 coal licenses (IUP). Most of them are for operations in Kalimantan and Sumatra. The majority are in Kalimantan which has 61 PKP2B (80%) and 2,670 IUP (69%). All in all, Kalimantan accounts for around 90% of the total national coal production. Most of the IUP (around 80%) are at the exploration stage with the rest in the production stage. There are problems with around 400 IUP. Most of the coal production is undertaken by coal agreement holders and SOE (which account for around 70% of the national coal production).
Fuelling Indonesia’s domestic coal demand: an additional 55GW of power generation capacity
Indonesia’s electricity demand growth is still high (9.4% per year), with PLN, the state electricity company as the biggest coal buyer in Indonesia (66mn tons in 2013). PLN has stated that electricity supply in Indonesia will continue to rely on coal fired power plants (CFPP) for at least the next 10 years given the relatively cheap production costs involved. By 2020, PLN expects total additional power generation capacity to reach 55GW (PLN: 31GW, IPP: 24GW). Of this amount, 35GW or 65% is expected to come from coal power plants translating into additional coal demand of around 100mn tons p.a.
China’s Coal Import Restrictions: 50mn tons from Indonesia
From 2010 to 2012, China’s thermal coal imports increased each year, more than doubling from 71mn tons to 155mn tons, with Indonesia’s thermal coal amounting to 54% of the total in 2012. This year, China is expected to import 380mn tons of coal in total (+31% or half last year’s growth rate). One of the hot issues being discussed was China’s coal import restrictions stipulating: 1) a minimum CV of 3,750kcal/kg (NAR), 2) maximum sulphur content of 2% and 3) maximum ash content of 25%. Around 30% of China’s steam coal imports - or about 50mn tons coming from Indonesia - were lignite. India would benefit from China implementing an imports ban as it would mean lower prices. In 1Q13, however, China’s coal imports still showed an increase of 30% yoy.
Future of Indonesia’s low rank coal
The government seeks a greater role for domestic coal, especially in LRC (mine mouth power plants, gasification, liquefaction). Indonesia has abundant low rank coal resources, accounting for 40% of Indonesia’s total resources, with medium and high rank coal accounting for about 50% and 10%, respectively. There is a need to foster greater international cooperation to develop the technology for the utilization of low rank coal for domestic needs by implementing Clean Coal Technologies with build operate transfer schemes (BOT schemes) to improve calorific value and efficiency.
A Challenging Outlook
The outlook for coal mining will remain challenging, in our view, given the currently depressed coal prices (down 5% average YTD) and persistent global economic headwinds. China and India combined account for more than 30% of the world’s seaborne import volume. Their dominance is expected to continue with potential growth seen in India. Environmental and Regulatory issues will limit coal imports growth, however, as reflected in China’s draft proposal for a ban on imports and the current development of Hydropower and Nuclear generation.
Adding to the woes, Indonesia’s new draft regulation (increasing coal royalties, export quotas) has worsened the investment climate for coal producers in the country.
The author of this article Ms. Maureen Natasha, an equity analyst in PT Danareksa Sekuritas. Danareksa is a pioneering Indonesian financial institution and was the first to introduce mutual funds in Indonesia. It was also the first to launch a US Dollar-denominated fixed-income fund and promote syariah-based investments. Today, Danareksa is the only local company to offer direct market access services to clients worldwide and has grown to become the company that has underwritten the most equity and debt placements in Indonesia.
Views and opinions / conclusion expressed herein are personal views of the author and not that of COALspot.com. This article is subject to disclaimer terms of PT. Danareksa Sekuritas.
If you believe an article violates your rights or the rights of others, please contact us.
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Tuesday, 25 June 13
NEWCASTLE PORT SHIPPED OUT MORE COAL W-O-W
COALspot.com - Newcastle port in Australia has loaded 3,101,378 tons of coal for the week ended 0700 hours 24 June 2013, Newcastle Port Corp. ...
Monday, 24 June 13
INDONESIA COAL SWAP FOR AUGUST 2013 DELIVERY GAINS WEEK ON WEEK
COALspot.com – Coal prices for immediate supply contracts have started moving up, but prices for next year supply shows a negative trend ...
Sunday, 23 June 13
BDI CROSSED ITS PSYCHOLOGICAL BARRIER THIS WEEK - VISTAAR
COALspot.com : The BDI crossed the psychological barrier of 1000 points after many months and closed at 1,027 points, which were up by 14.11 pct wee ...
Sunday, 23 June 13
SHIP PRICES NOT FOLLOWING FREIGHT MARKET FUNDAMENTALS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Although it's been the case in many occasions in the past, it appears that ship prices haven't been quite following freight market fundamentals, i ...
Friday, 21 June 13
U.S. COAL PRODUCTION INCREASED WEEK ON WEEK, EIA SAYS
COALspot.com – United states the world’s second largest coal producer produced totalled approximately 19.70 million short tons (mmst) of ...
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- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- The University of Queensland
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
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